Sound Advice with Brown Advisory's Stanard T. Klinefelter

April 24, 2017

Sound Advice is a new charitably-minded Q&A series from BCF for and by professional advisors in Baltimore. Do you have advice to share with colleagues? Contact Rosemary Calderalo today.

Stanard T. Klinefelter is a strategic advisor at Brown Advisory responsible for counseling clients on estate planning, wealth transfer, and a number of wealth management-related issues.

Q. If I have moved out of Maryland and I continue to support the Baltimore Community Foundation, will that jeopardize my non-resident status?

A. While there is no hard and fast answer, most tax practitioners would say no, based on the following:

In order to change your tax status from Maryland to another state, you must establish that you are no longer domiciled in Maryland and have established (and intend to continue) domicile in the other state. Even if you have successfully changed your domicile, you must not maintain a “place of abode” in Maryland for more than six months of the taxable year. Time is the only “bright line” test and “having an abode” has been interpreted to mean being present in the state for more than six months of the year. It is well established that one can have numerous dwellings or abodes, but only one domicile, so that having a residence in Maryland is not in and of itself a determining factor.

Assuming you stay out of the state for six months of the year, the concern is whether you have completely changed your domicile. Tax advisors provide checklists of factors to be considered in changing domicile and it is best to comply with as many of those as possible. Of those, the courts have said that the two most important factors are obtaining a residence in another state and voting in that state. Other factors include affidavits of domicile, driver’s licenses, car titles, mailing addresses, and many others. The more evidence you can provide to show that you have changed your domicile, the better, but no single factor is determinative.

Turning to the question of continued support of BCF, there isn’t any basis for Maryland to consider support of Maryland charities in mounting a challenge to your domicile. New York, which is known to be the most aggressive state in auditing changes of domicile, has a statute that specifically prohibits the taxing authorities from using contributions to in-state charities as a factor in determining domicile. This codifies a strong public policy argument that doing so would discourage charitable giving and be detrimental to the state. While there is no comparable statute in Maryland, I believe that Maryland takes the same approach.

This information is offered as an educational service. While we attempt to provide helpful estate and financial background information, BCF is not able to offer specific legal advice on personal situations.  We always encourage individuals to seek the advice of their own professional advisors to create a customized estate and financial plan that truly fulfills each individual’s unique family, healthcare, estate and planning circumstances.

 

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